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Finance minister and deputy prime minister Grant Robertson (Mark Graham/Bloomberg)
Finance minister and deputy prime minister Grant Robertson (Mark Graham/Bloomberg)

The BulletinOctober 13, 2021

The cost of the government’s good books

Finance minister and deputy prime minister Grant Robertson (Mark Graham/Bloomberg)
Finance minister and deputy prime minister Grant Robertson (Mark Graham/Bloomberg)

The finance minister thanked workers for saving the economy, but businesses and low-income families might be left with little to celebrate, Justin Giovannetti writes in The Bulletin.

The state of the economy. Grant Robertson was in a sunny mood yesterday after the Treasury unveiled the final figures for the financial year ending in June, confirming that government revenues were billions above expectations while spending had fallen. For the finance minister, it showed an incredible turnaround for the country after the first Covid-19 lockdown. The economy rebounded more rapidly than anyone thought possible. As the NZ Herald reports, the situation is even rosier when you consider the soaring value of the government’s assets. Robertson said that workers had “protected the economy”, with corporate profits up sharply and the deficit down to one-third of the level projected only a few months ago.

Sitting in a mask-wearing, socially-distanced audience, it felt like there was a disconnect between a finance minister claiming a big win and a country where many people are seeing their finances slip away. First, there are the business people sitting around the country worried they’ll close in the coming months. RNZ reports that Auckland businesses found the minister’s optimism bewildering. The full economic impact of Auckland’s lockdown won’t be known for some time, but Robertson said he expects the economy to roar back eventually. “The New Zealand economy is strong, resilient and robust and will bounce back from the position we are in now,” he said.

It’s all about choices. As Robertson spoke I was thinking about a recent conversation I had with my better half about one of her friends. The woman lives in a rented house in the Hutt Valley, works a blue-collar job and is raising seven children with her partner. They both brought kids to the relationship. She stretches a small budget to keep everyone fed. She has a medical condition, as does one of her kids. She only has enough money for one treatment, so she skips her own. Her house is perennially cold in the winter, because of high heating costs. She’s never complained and doesn’t see herself as struggling. She only talks about needing to make choices. It’s hard for me to disentangle some of the choices she needs to make on a daily basis with choices made by Robertson and his predecessors in the finance minister’s office.

With revenues $7 billion higher than expected, and the deficit down to $4.6 billion, Robertson was asked if there’s more he could do to help people facing mounting living costs as rents soar, along with power bills and food costs. People who aren’t on government assistance, but could have their lives made a little easier. While there’s been a boost to people on the benefit this year and those who qualify for the winter energy payment, Robertson said not to expect more, concluding “we’re still in deficit”.

Who wins when the economy is protected? The government’s debt is now $10 billion smaller than expected at the start of the year. New Zealand’s debt had been projected to hit 34% of GDP, up significantly since before Covid-19 but still one of the smallest among countries with advanced economies, who are hovering around 90%. Instead, it was barely above 30% of the economy in June. New Zealand’s focus, according to the finance minister, remains on returning to balance and paying down the debt. The government’s improving balance sheet shouldn’t be compared to people who might be struggling, Robertson said.

“Businesses are doing well, that means people are being paid more, that means more people are working, that means consumers are out spending and supporting retail. These accounts show the strength of that. On the other side they do show a careful balance in the way we’re managing the books…We’re clearly aware that within that economy there are people with different experiences and that’s why we provide the support that we do. I don’t think it’s fair to say these accounts show anything other than New Zealanders working very hard.”

A call for support. While Robertson has said he isn’t interested in big new spending, the prime minister confirmed on Monday that some additional support for low-income families is coming. As Newshub reports, there hasn’t been any details, but the Child Poverty Action Group says help is needed and fast as food banks can only do so much to plug the holes in the country’s social safety net.

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